Trade group bullish on Thai steel demand

Trade group bullish on Thai steel demand

A worker handles a steel bar at Millcon Steel factory in Rayong which produces steel bars, wire rod steel and structural steel. The company's steel output is used in construction and other industries, including car manufacturing.
A worker handles a steel bar at Millcon Steel factory in Rayong which produces steel bars, wire rod steel and structural steel. The company's steel output is used in construction and other industries, including car manufacturing.

The Iron and Steel Institute of Thailand expects the country's steel market to expand at least 5% in 2022 and has called for more government collaboration.

Nava Chantanasurakon, chairman of the institute, predicted Thai steel demand would expand at least 5% year-on-year in 2022, citing a rebound in exports and services.

He said steel serves as the backbone of the manufacturing sector and is integrated into the government's plan for a circular economy.

The pandemic caused problems for Thailand's manufacturing sector, including a labour shortage, new social distancing measures for construction projects as well as longer construction periods, said Mr Nava.

Wirote Rotewatanacha, president of the institute, reported a 15% year-on-year increase in steel consumption to 17.3 million tonnes in the first 11 months of 2021.

The organisation cited a 22% increase in flat steel consumption and a 4% uptick in long steel.

However, in terms of expansion the steel import rate of 20.9% is higher than the country's manufactured rate of 8.3%.

To rectify the issue, the institute is working on a 4.0 steel development plan with the National Innovation Agency and other associations.

This plan aims to deliver government assistance to domestic steel producers, placing a heavy emphasis on public-private partnerships, steel purchasing contracts with the government, public relief assistance programmes and measures to avoid a steel glut.

Steel prices have decreased because producers worldwide have resumed close to normal manufacturing capacity, said Mr Nava.

The latest figures at the beginning of January for flat steel and long steel in China stood at US$756-762 per tonne, a decrease of 18-24% compared with their all-time high in the middle of 2021, Mr Nava said.

Mr Nava said it is unlikely steel prices would fall as low as in 2020 because prices in China and Asia have stabilised.

Two factors that could push up the price of steel in the first quarter of 2022 are China's removal of an export value-added tax rebate on steel products and the country's tightened environmental regulations and oversight, he said.

Mr Nava said he was monitoring the effects of the Regional Comprehensive Economic Partnership free trade agreement, which took effect at the start of the year, on Thailand's steel import rate.

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